By Nicole Montesano • Staff Writer • 

High inflation brings county ‘welcome bonus’

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Comments

Oregonian

"We could go the opposite as well, so I wouldn’t want the county to bank on for budget purposes, bank on this greatly increased income. Instead, just treat it as a welcome bonus if it happens the way that I anticipate it will.”

And that is why Multnomah and Marion counties manager their cash pool so much more effectively than the smaller Oregon counties. They have an amount money to use that is so large that they are forced out of the state of Oregon pool (by law) and must consider other options. As soon as they did that, they realized the didn't want to have interest rate uncertainty when budgeting.

Yamhill County could easily change their investment policy by creating one and submitting it to the Oregon Treasurer's office for approval. The county could then start to lock up funds for longer periods of time, thus increasing certainly. If rates drop in the future, the county would have not see a decline in income. If rates go up, so what, at least we knew exactly how much income we would get in the future and be able to budget for it. It is horrifying to think the treasurer would treat income as a bonus (and then who knows how those funds would be spent) instead of making a budget based on reasonable interest rate assumptions.

Yamhill County has gone around and around this issue for decades. It is getting exhausting.

Rates aren't going to plunge anytime soon. There is too much inflation and too much excess growth in the US economy for that to happen. Now is the time to lock into long term investments that will get us off this needlessly self-imposed uncertainty dance.

Oregonian

Two articles for context on this issue:

News Register - Jan 18, 2003 "County Investment Policy"
News Register - Feb 25, 2009 "County Is Facing Cuts, Uncertainty"

The earlier article covered a time when the county had this option laid out in simple form. The later one covered the point in time when the cost of avoiding change and new ideas was painfully clear.

Raven

Oregonian, I suggest that you go to the Treasurer’s page. You will see that the county is already doing everything that you suggested. There is an approved Investment policy. The county invests in bonds as long as 5 years if the rates are right. https://www.co.yamhill.or.us/treasurer

Oregonian

Raven - I've read the county investment policy, committee meeting minutes and even watched a couple of the youtube videos on the site.

The county is NOT locking up any of their assets for 5 years, as they are allowed to do. This is the exact reason that there is interest rate uncertainty when budgeting. Anytime you have a committee, you have a group of individuals who don't want to look stupid. No one has ever been willing to lock into 5 years because they fear regret for doing so. The larger counties have been locking up into longer term investments because they were forced by law to get out of the short term pool.

Oregonian

Last comments from me and then I'm done commenting on the county's budget, investment policy and investments.

The county's investment goals are at odds with the investment options they list. Goal #1 is to not lose money. Corporate bonds are listed as an investment option. Corporate bonds have lost money in the past.

Another weird investment listed is tax free bonds. Why in the world would a tax free entity consider lower yielding tax free bonds when they don't pay tax on the taxable (higher interest) ones?

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